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Nikkei Markets

Hong Kong shares end flat as protests, yuan in focus

BYD slides after July sales volume drops while Cathay gains following results

HONG KONG (Nikkei Markets) -- Hong Kong shares ended little changed on Wednesday after a five-day losing streak, with investors cautious amid worries over U.S.-China trade tensions and political unrest in the city.

The Hang Seng Index rose less than 0.1% to 25,997.03 after falling as low as 25,738.80 earlier. It had shed 7.7% in the five days through Tuesday.

Ping An Insurance Group edged 0.3% lower. Ping An Healthcare and Technology, its online health care unit also known as Good Doctor, jumped 8.3% after reporting a narrower loss in the January-to-June period, following a more than doubling of its revenue for the period.

Cathay Pacific Airways ended 0.8% higher after saying it swung to a profit of 1.35 billion Hong Kong dollars ($175.5 million) for the first half of the year.

The local benchmark gauge, which opened higher after all three major indexes on Wall Street rose 1% or more overnight, traded lower for most of the day amid persistent weak sentiment. The yuan traded onshore fell 0.2% to 7.0374 against the dollar after edging higher on Tuesday.

The People's Bank of China on Wednesday set its daily reference rate at 6.9996, weaker than Tuesday's fix at 6.9683 and just shy of the 7 level, which has long been considered a threshold that Beijing will protect. The unit can move 2% in either direction reference rate on any given day. The Shanghai Composite Index was little changed.

The yuan is trading at its weakest levels in about a decade following a threat by U.S. President Donald Trump that Washington will impose import tariffs on more Chinese goods. The currency's weakness prompted the U.S. to label China a currency manipulator on Monday.

Meanwhile, local investors were also on edge as monthslong anti-government protests in the city showed few signs of letting up. The demonstrations, which started in June, were triggered by a call for the withdrawal of a now-suspended controversial extradition bill. The protesters are also demanding the resignation of Chief Executive Carrie Lam. The movement has since occasionally turned violent and disrupted public transport.

"We do not see easing signs related to many unfavorable factors, and the local issues especially will have a profound impact on the market in future," said Stanley Chik, head of research at Bright Smart Securities.

He said local political unrest was the biggest reason for him turning pessimistic on the market. "I have reduced holdings for most shares I own and unless there is a breakthrough, I don't have the confidence to buy in," he added.

The Hang Seng Index, which has so far shed 6.4% in August, saw its 14-day relative strength index, a measure of momentum, slide below 30 last Friday. The drop is a signal to some technical analysts that the gauge may be oversold.

Electric carmaker BYD fell 4.8% in Hong Kong following a 17% decline in total sales volume for July.

China Overseas Land & Investment added 1.6% after reporting a 43.8% jump in contracted sales for July.

Property developer CIFI Holdings advanced 0.7% after reporting a 14.8% increase in contracted sales for last month.

Ronshine China Holdings, which reported a 30.3% rise in first-half profit, rose 2%.

Truly International Holdings climbed 3.2% following a near-30% year-over-year jump in net consolidated turnover for July.

Genting Hong Kong advanced 6.5% after saying its unit will sell up to a 35% interest in Dream Cruises to Darting Investment Holdings. The deal will result in a gain of about $470 million for Genting.

GCL-Poly Energy Holdings slid 2.6% after swinging to a loss of 998 million yuan ($141.9 million) for the first half of the year, following a 9.3% decline in revenue.

Mobile phone maker Coolpad Group advanced 5.7% after saying it expects to report a "significant decrease" of more than 80% in its consolidated net loss for the January-to-June period.

Steel products maker China Oriental Group declined 5.7% after saying it expects profit for the January-to-June period to decline between 35% to 55% year over year.

-- Benny Kung

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